Edinburgh hotels suffer fall in occupancy rates

Hotels across Edinburgh suffered a 'worrying' drop in occupancy rates last year. Picture: TSPL
Hotels across Edinburgh suffered a 'worrying' drop in occupancy rates last year. Picture: TSPL
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HOTELS across Edinburgh suffered a “worrying” drop in occupancy rates last year, according to a new report that shows the capital lagged behind rivals Aberdeen and Glasgow in the race to attract visitors.

Although occupancy and room rates across Scotland outstripped any other part of the UK in 2012, the findings from accountancy firm PKF painted a gloomy picture for the health of Edinburgh’s hotel sector, which contrasts sharply with a strong performance in Aberdeen.

Colin Paton, chairman and chief executive of Portland Hotels – which has venues in Aberdeen, Edinburgh, Glasgow and Perth – said the leisure market had been hit by last year’s London Olympics, while demand from corporate travellers has fallen heavily since the financial crisis erupted in 2008.

He added: “Aberdeen is a completely different market, because it has the oil industry. Aberdeen and London are the only places in the UK at the moment that are producing real growth after inflation. The rest is in real contraction.”

Scotland as a whole enjoyed the UK’s highest occupancy figure of 73.9 per cent, up 0.3 per cent on 2011 and well above the UK average of 70.7 per cent.

But PKF said overall occupancy in the capital dropped 2 per cent last year, compared with an increase of 0.8 per cent in 
Glasgow and a jump of 5.7 per cent in Aberdeen.

Councillor Frank Ross, convener of Edinburgh city council’s economy committee, said: “Occupancy figures tend to fluctuate from year to year and events such as the Olympics may have contributed to this slight fall. Long-term projections suggest that there will be an increase in 2013, in the run-up to events such as the Ryder Cup and the Commonwealth Games.

“However, we will not be complacent and will continue to work to attract international investment and tourism.”

Scotland’s room yields – the industry measure of revenues – dipped 0.3 per cent last year but remained the highest in the UK with an average figure of £50.02.

Revenues soared 11.1 per cent in Aberdeen to £59.74, well above the UK average of £42.43, but Edinburgh suffered a drop of 4 per cent.

Paton told The Scotsman that inflation was the “real frightener”, as the effect of rising prices meant revenues in Edinburgh had fallen about 7 per cent in real terms.

Alastair Rae, a partner at PKF, said: “Although revenue in 
Edinburgh hotels remained relatively high at £55.84, the concern is that occupancy averaged less than Aberdeen, Glasgow or Inverness for the year, which is extremely unusual and indicative of just how difficult last year was for the capital.”

He added: “With little sign of any improvement in the wider economy, it is likely we will see more of the same in 2013. Hotel-iers are being battered by an unforgiving economic storm.”